SIA reports good transformation progress despite 52% drop in operating profit

Singapore Airlines has reported a 52.3% drop in operating profit in the April to June 2018 quarter to SG$193 million, down from SG$405 million the year before. As a result of weaker operating profit, group net profit fell 58.6% to SG$140 million. Despite the performance, SIA’s outlook statements said good progress was achieved in the first year of the group’s three-year transformation programme.

As such, the group will continue to focus its efforts on initiatives to grow revenue, enhance customer experience and improve operational efficiency. Currently underway is also the development of new e-commerce channels through KrisShop, which the company added is “well on-track”.

Marketing has reached out to SIA for comment on the latest marketing figures, but a quick check on its annual report found that in the financial year 2017-18, advertising and sales costs were at SG$291.4 million. This was down from SG$304.3million the year before.

Meanwhile, group revenue amounted to SG$3.8 billion, with passenger and cargo flown revenue increasing by SG$178 million, outweighing the absence of the non-recurring items in the same period last year. The growth in passenger flown revenue by 5.1% at SG$148million was driven by an 8.3% increase in traffic, which outpaced the 3.2% decline in passenger yield.

In October last year, SIA revealed plans to invest heavily in digital over the next five years as it embarked on its “next stage of transformation”. This followed the creation of its “transformation office” created in June 2017 to review what the organisation is doing and better position itself for growth.  Some initiatives in the pipeline include the increase in the company’s investment in digital enablers.

Since then, the company has launched new initiatives such as a beta chatbot named “Kris”, in a bid to expand its digital servicing channels for consumers. This is to address enquiries related to baggage, check-in, online booking and travelling with infants and children, in English.

As part of its digital blueprint, the company recently launched KrisPay, a blockchain-based airline loyalty digital wallet. The digital blueprint also includes collaborations with research institutions and companies in the start-up community, in a bid to create a more innovative and digital culture within SIA through staff training and involvement in digital projects.

(Read alsoSIA mulls job cuts as some roles 'may become irrelevant')

Another significant move the group made recently as well was its investments to improve SilkAir’s product offering by merging it with SIA. This includes a spend of more than US$100 million to upgrade its cabin products as part of a multi-year initiative. SIA’s spokesperson confirmed to Marketing that the SilkAir brand will no longer exist after the merger. In terms of branding, SIA also recently extended its title sponsorship of the Formula 1 Singapore Grand Prix for another two years until 2019. It first came on board as a title sponsor in 2014 initially for two years, unseating telco Singtel in a high profile takeover. Subsequently, it extended the sponsorship for the 2016 and 2017 races.

Read also:
The ‘topping up’ mindset: Does Singapore Airlines suffer from it?
Singapore Airlines works with start-ups to push for creativity and innovation
Singapore Airlines emerges top brand Singaporeans proud to work for